UPDATE 1-Fed says loan credit quality improves in 2010

(Adds quotes, details)

WASHINGTON, Sept 28 (BestGrowthStock) – The Federal Reserve and
other regulators said on Tuesday the credit quality of large
loans that U.S. and foreign banks and nonbanks were committed
to make in 2010 was still weak but not as bad as in 2009.

The Fed and three other regulators reached that conclusion
in their annual Shared National Credits Review for 2010.

It looks at loans and formal loan commitments as well as
any asset such as real estate, stocks and bonds taken as debts
previously contracted by supervised institutions and shared by
three or more of them.

The review said that total shared commitments fell $362
billion to $2.5 trillion in 2010 and that total shared loans
outstanding were down $352 billion to $1.2 trillion.

A loan commitment is the obligation of a lender to make
loans or issue letters of credit according to terms of a formal
loan agreement.

The Fed, along with the Federal Deposit Insurance Corp,
Office of the Comptroller of the Currency and Office of Thrift
Supervision, said the quality of commitments “remained weak in
2010, but improved from 2009”, implying a better economic
atmosphere for both borrowers and lenders.

“Reasons for improvement included improved borrower
operating performance, debt restructurings and bankruptcy
resolutions and improved borrower access to bond and equity
markets,” the Fed said.

Nonbanks include hedge funds, insurance companies, pension
funds and securitization pools that have loan commitments.

The Fed said that so-called criticized assets, which
include those rated “substandard, doubtful and loss” declined
to $448 billion in 2010 from $642 billion in 2009, another
measure of improving credit quality.
(Reporting by Glenn Somerville; Editing by Chizu Nomiyama)

UPDATE 1-Fed says loan credit quality improves in 2010